Operator: Thank you. Our next question comes from Alex Henderson of Needham. Alex, your line is open. Please go ahead.
Alex Henderson: Great, thanks. I was hoping you could talk through the dynamics around pricing. Typically, the March quarter has 10% or 15% type price declines in it. Are we seeing any of that? I have heard that the pricing is much flatter this year than traditional. And similarly, on the flipside of that what are you seeing on the supply chain side? Pricing to you is — obviously you have talked about $60 million in constraints, but what about on the pricing side and the margin impact of the supply chain piece of the equation? Can you give us some guidance on that? And as you are looking out into the June quarter, do you expect this inventory correction, the resultant some non-seasonal pricing changes? Thanks.
Alan Lowe: Yes, Alex, I would say that you are right. The pricing environment with — between us and our customers is very different than the 10% to 15%. In some cases, prices are actually going up. But overall, we are in this for long term with our customers. And so, we try not to take advantage of the short-term with really focusing on helping them win in the market and helping us have long-term supply agreements with our customers. So, the price dynamics are very, very different, and you are right, it’s much flatter than traditionally. I would say pricing too as from our suppliers has moderated with respect to the price increases we saw a year or so ago. That said, we are still going out to the broker market when we need to satisfy for customer demand.
And we are having to pay spot buy premiums that impact our cash significantly. We are seeing less of that frankly more recently. But we are still in that game for some period of time. And then, in the June quarter, your inventory digestion question is that around Datacom or is that something else?
Alex Henderson: Well, the question is ultimately as things start to normalize given flatness of pricing over the last two years, does that pricing start to creep back into the equation as a downward pressure maybe on a non-seasonal basis but rather on a cyclical basis?
Alan Lowe: I see, okay. Yes, like I said earlier we are working with our customers to try to satisfy their short-term needs for price reductions but also our longer-term needs to have agreements in place that extend a year or two. And that’s what we’re working on a win-win solution with our customers that would then ensure that we have set prices with them. And we have set share agreements with them that extend beyond the short-term. So I’d say that as inventory or as supply becomes available, that $60 million or $70 million of unsatisfied backlog will be satisfied. But we don’t see that happening in the June quarter, we see continued challenges, as we need to get the semiconductors in house by April in order to make the shipments for June. And so we’re still seeing challenges and think it’s going to go into the — early into the second half of the calendar year.
Alex Henderson: Second follow-up question is on the technology front, there are a couple of moving pieces that I was hoping you could address. So, the first one is that we’ve heard that there’s a new module going into the primary 3D sensing customer that in the new additions that is pretty meaningfully changed from the prior-module. And I’m wondering if that is a function of your design or somebody else’s? And then second, you talked about delays in the timing and the ramp on the Datacom. I’m assuming that that is not a real relation to any missed windows on getting the new products up. And then third off of this a broader question. AI is taking off in most of the Cloud customers, is there an impact from changing the architecture of the Datacom, Telecom network for AI impacting your business? So, can you address the technology side of those, those key pieces? Thanks.
Alan Lowe: Yes, so thanks, Alex, great question. Maybe kind of start with the Datacom and then circle back around to the 3D sensing. So in the Datacom side of things, the period of extended digestion is not driven by any missing any product window, I think it just is generally driven by cloud CapEx trends and perceived probably, economic outlook by customers or end customers. In terms of the AI architecture, yes, I think it’s a tremendous opportunity for Lumentum and folks like Lumentum, because not only talking about transitioning to higher speeds, but you’re looking at copper move to optical, and it’s very interconnect dense or rich architecture. And therefore, we expect an acceleration in volumes. And as we highlighted in the prepared remarks, we’re broadening our technology, or product offering, within the Datacom portion of our Telecom and Datacom business, we’ve been really focused on EMLs and DMLs that’s what we had, when we got out of the module business, but over the past couple of years, expanding the axial photo diode, high power lasers for silicon photonics and CPO architectures to live a broader product offering as that plays into this very rapidly expanding interconnect dense or rich AI architecture.
Circling around the 3D sensing, not sure what is being referenced. But I don’t think it’s appropriate to comment or speculate on a specific customer program or what’s going to happen next year, we remain focused on being the innovation partner and a best proven supply partner for our customers. And we remain very competitive in that space.
Kathy Ta: Thank you, Alex.
Operator: Thank you. Our next question comes from Meta Marshall of Morgan Stanley. Meta, your line is open, please go ahead.
Meta Marshall: Great, thanks. I know we’ve kind of circled around it. But I guess I was just surprised to see the broker fees increase kind of pretty meaningfully this quarter from the past couple of quarters. And so just wanted to get a sense of, was that some acute increase in fees towards the end of the quarter, just as some of the China reopening pieces made the environment a little bit more acute, or just kind of what led to kind of that pretty dramatic step up and then just, it seems as if you’re saying they’ll step down, but just we expect to kind of go back to some of the more normalized like, when is your view that we get back to less dramatic broker fees being paid. And then maybe this follow-up question for me just any update on kind of the DSP development efforts? Thanks.
